Moving Greece to centre stage

The effects of the crisis on Greek women’s lives

First published 3-5-2010

A.The story of the economic crisis is daily unfolding before the eyes of a stunned audience. The show is new, the parts and casting have recently been distributed and the audience is still unclear whether the play is a tragedy, a soap opera, a Chekhov play or an opera buffa. What is certain is that when the Greek spectators first entered the crisis play in 2008, they thought that they were witnessing the sidelines or the fringe, while the centre of the action was elsewhere. Suddenly, in 2010, they discover that in an unforeseen twist of the plot, the quiet backwater of the Southern periphery is now playing centre stage as the Achille’s Heel of a major world currency. Some already fear that the shift to centre stage may mean that the comfortable accommodations and genteel manners of ‘not pushing adjustment too far’ may have come to an end. It is not only that the upcoming recession is deeper than anything that Greek society has seen since the war, but also possibly that issues that had been consistently dodged for the last generation, are no longer viable and will have to be faced.

Critics are not usually asked to comment on a play half way through the action. Nevertheless economists do not have this luxury. Women in this play, as is usual, will be thought to have a supporting role, or will merge in the background in the small credits that nobody reads. The perceptive critic may actually see through the plot and point out that the true play has maybe female protagonists. These critics will offer some observations a) on the nature of the play and the directions it may develop and b) hazard some guesses about what this means for women.

B.Uncertainties. Analysts originally thought that Greece, being in the periphery and possessing neither a housing bubble nor a concentration of toxic assets, was relatively immune from the worst part of the recession. The fact that the country entered the recession encumbered with two major open structural issues (pension reform and the role of the public sector) was not thought relevant. However, two years afterwards, Greece finds itself at the centre of attention and under increasing speculation that is on the road to default. Far from being the backwater, it finds that it is the centre of attention as an example of critical issues of Eurozone governance: how to deal with a huge competitiveness problem, how to unblock structural reforms, how to govern a currency union with a hopelessly underdeveloped political dimension. Greek subjects were in older times habitually ignored as being parochial. This allowed a degree of laxity, the possibility to plead special cases, and ultimately to deal with problems lightly or not at all. Now that Greece is at the front of the class, being tested as a showcase of the Eurozone’s resilience, these old habits must be given up.

B.1.The shift to centre stage could well mean that the rules of the game, as understood in Greece, have irrevocably changed. The depth of the recession and the structural changes that will have to accompany the recovery are both unknown and unknowable. The incomplete domestic reform project which answered to the name of Andreas Papandreou’s 1981 ‘change’ (αλλαγή), Costas Simitis’ 1996 ‘modernisation’ (εκσυγχρονισμός), Costas Karamanlis’ 2004 ‘re-founding of the state’ (επανίδρυση του Kράτους) or finally George Papandreou’s 2009 ‘Reform’ (Μεταρρύθμιση) must, one way or another, finally be completed.

B.2. In a country where social policy and a safety net were utilised as a screen to hide and protect social privileges, it is unclear what will happen now that the need for a safety net will become increasingly real. On the one hand ‘safety net expenditure’ will be under threat for public finance reasons, on the other, the need for a real safety net will be rising. The gap will be filled by utilising the potential for solidarity within the family. But, as happened in the US during the 1930s Depression, as the crisis deepens, the number of sources that can offer help will be becoming fewer all the time. It is certain that a mechanism like this will be a key part of the dynamics of the crisis over the next years, but its exact course is very uncertain. One example suffices: the biggest single wealth item is the family home and real estate generally (Greeks have the highest rate of second home ownership, usually houses in the village of internal migrants in the cities). Real estate prises in contrast to Spain, have been exceptionally steady. Can this continue?

B.3.At the current stage what is known or can be guessed is the extent of public finance adjustment that Greece is committed to in the context of the Stability Pact: a reduction of a public sector deficit of 12.7% to 3% in three years. 4% reduction has to come in 2010. The exact measures and more generally how this reduction will come about is entirely uncertain. Over the first two months of 2010 the government has been proposing measures, they are deemed obviously insufficient, others’ counterproposals are submitted, while the markets are still heavily betting on bankruptcy. The existence, form and content of a possible rescue package is also open to speculation. In this environment fear of what will come is far greater than the pain of what has already been decided. When measures come, whatever they may be, they will be –to an extent- a relief of the reduction of uncertainty (Uncertainty for 2010 will be succeeded by uncertainty about what will happen in 2011 and 2012).

B.4.Though the quantitative magnitude of the public finance adjustment is known, key decisions about how this will be attained are entirely unknown: First, to what extent can the adjustment, as some in the left-wing hope, be achieved by reducing –and taxing- the grey economy ? Can this be a ‘free lunch’ or will it have repercussions that will be felt in the wider economy and, most tellingly, inside the family? Second, what does the public finance adjustment mean about the size and the functions of the public sector? Is it possible that existing structures will simply be fed by more tax revenue? Third, what will happen to some of the dualistic features of the Greek economy? Will insiders receive more protection (the draft labour legislation submitted already promotes more protection) or will the pressure from international organisations lead to a reduction in protection? All these uncertainties combine in a general uncertainty of what Greece will be like in 2012.

B.5. After the end of the crisis, the structural composition of output will be different. Some jobs will disappear, while others will take their place. What can we say about structural change? First, the size distribution of firms. Shall we witness the death of the small family firm, squeezed by laudable efforts to tax the grey economy? It is well known that small and large firms react differently to problems. The obituary of the Greek family firm has been written many times in the past, most notably when Greece joined the European Community in 1981. On the contrary it was large industrial plants (what then were seen as the essence of industrial modernisation) that disappeared. Our expectation is that the family firm will survive, but under a new metamorphosis. Second, the sectoral composition of output. Finland reinvented itself as a technological leader in the 1990s. What Greece will reinvent itself as, no one knows; yet continuing as it is now, with the competitiveness gap, is probably no longer an option. Third, Greece in the last years emerged as something of a regional leader in South Eastern Europe. Can this persist, or will the crisis de-couple it from recently assumed roles?

Given these uncertainties, one can speculate how the position of women and the processes that have been shaping the position of women in the last 20 years will be affected.

C.Women: the big picture. Greece since 1981 has been actively promoting what has been called a process of ‘legal formalism’ to promote gender equality. This has meant that women were the main beneficiaries of increasing employment in the public sector, whilst the gap between insiders and outsiders was widening. Similarly, women are participating far more in education with the result that higher education graduates in younger cohorts display higher percentages of women than men. The arrival of migrants has added female immigrant workers chiefly in the sector of personal services which has allowed the exit of women from unpaid family labour to the labour market. These developments of the last 10 years are rapid but still fragile as manifested by a concentration of unemployment on young women and the persistence of the gender wage gap. The social protection system is still heavily tilted towards pensions, with insider women still ‘beneficiaries’ of low retirement age. Active labour market policies and social services for mothers are recent additions, are largely financed by EU structural funds and reach a small part of the general population. What will the impact of the crisis be on this fragile equilibrium?

C.1.The labour market. Insiders, one in four working women, will see their pay pack reduced in money terms, but will not face any dismissals (as they enjoy job protection). A small number of women between 40 and 50 will see their retirement age rise slightly (retirement ages cannot rise for those who can already exercise their right –roughly the 50+, while no one is talking of increases for those under 40, who are already in a much less generous system). Uncertainty nevertheless is bound to lead to a rise in pension applications which will mean (a) that there will be more women pensioners looking for a secondary job and (b) more women will have to cope with very low pensions on a permanent basis in years to come. As new hiring for insiders is likely to freeze, there will be greater queues for young qualified women financed by good families waiting for insider jobs. For outsiders the situation will be worse. They will simultaneously experience dismissals and cuts. If recovery concentrates on attacking tax evasion, this might well mean that large parts of traditional family small businesses will have to be restructured and/or closed down with detrimental effects on hiring and employment. Migrants are the most outside of outsiders; migrant women in particular, most of whom work for households in the grey economy will be the ultimate receivers of pressed family budgets. What will happen will also depend on the flows of new arrivals. Given that most new arrivals see Greece as a transit country, this is unlikely to be much affected by domestic demand issues, which will squeeze settled migrants even more.

C.2.The family. The family has traditionally been the real social safety net and in this capacity it will be called to provide answers to all the uncertainties outlined in the previous section. The family’s financial buffer is the family home. This is reflected in 50 years unchecked rise in property prices. Since the start of the crisis the market shows very little activity, but prices are stable. Can this continue, if families are trying to liquidate their assets? Families will also have to cope with a sharp demographic twist around 2015, as the Greek baby boomers enter critical life cycle phases. The baby boomers are the ‘sandwich generation’ that care for their parents (now in their late 70s and older), their grandchildren and have to finance youth unemployment. They will be called to cope with these challenges with very little help, largely due to the crisis.

C.3.Consumption. Women are the consumers of the last resort, i.e. those who ultimately have to make ends meet. The family budget, in contrast to more masculine activities, cannot be reduced by derivatives and innovative accounting, nor even using Greek Statistics. Access to the banking system under current conditions is likely to be problematic. Greek households are less indebted than their counterparts in Western Europe, yet also are less used to manage their debt as part of the family finances.

C.4.Social Services and active labour market policies are subject to contradictory influences. On the one hand they will be subject to the general public finance squeeze which will undoubtedly be greater as cuts will operate on a ‘last in, first out’ scheme (pensions will not be cut, new programmes for crèche can easily by stopped). On the other hand, however, one of the key weapons that the government will use as defence against the crisis is to accelerate use of EU Structural Funds. Structural Funds so far have been treated as a milk cow (as something generating income for the providers of services, but with little emphasis on results and effectiveness). Structural Funds may also absorb any greater public finance and/or stabilisation aid that will come from the EU. These areas form the backbone of structural funds support as being horizontal actions that help competitiveness and avoid accusations of discrimination in favour of particular sectors.

D. Concluding thoughts. The crisis will undoubtedly be a very difficult time for the Greek society which will have to undergo experiences previously thought unthinkable. These experiences will involve much pain and a great deal of uncertainty. The share of women in this pain as the most vulnerable of outsiders and as those who suffer from the absence of a real safety net, will certainly be more than proportionate. This could mean a rolling back of social progress of the last 20 years: women may be forced to retire back to the family and accused of selfishness if they refuse to do so. On the other hand a more optimistic reading is also possible. As Schumpeter noted, rapid change is never linear. The crisis could lead to a cycle of creative destruction and may allow women to break the bounds of legalistic formalism to secure for themselves greater say and responsibility.

The crisis is a time of uncertainty, fear and pain. Out of this will emerge a society with new and as yet unknown rules. Influencing the shape of the society to come is something that can be done more easily in conditions of crisis than when faced with the complacency of unchanging structures and being told that things are like this because they have always been like this. For social activists this is the time to act.